Safeway closed a whopping 72 Dominick's grocery stores resulting in 6,000 jobs lost. They acquired Dominck's grocery chain, engaged a hedge fund, hyped up the stock price and then promptly shuttered the Illinois neighborhood grocery. The excuse is these Dominick's grocery stores serve low profit margin geographical locations. In other words, Safeway doesn't want to offer grocery access to poor people. Of course a hedge fund is involved and executives made huge bucks from the introduction of another predatory hedge fund into the Safeway shareholder mix while workers got pink slips right at Christmas.
Dominick's was founded by one man, an immigrant named Dominick DiMatteo, whose son helped him build the grocery chain. But unraveling the question of who was responsible for the demise of Chicago's second-largest supermarket company isn't so straightforward. The trail leads to Northern California, where Dominick's owner, Safeway, is headquartered. And from there it goes to New York. This year, a Wall Street hedge fund called Jana Partners invested more than $300 million in Safeway stock and demanded that the company make changes, notably that it exit "subscale and lower margin geographies." That demand was made public Sept. 17.
About three weeks later, on Oct. 10, Safeway announced that its struggling chain of more than 70 Dominick's stores would be shuttered Dec. 28. The decision meant as many as 6,000 employees could lose their jobs right after Christmas, and that customers who shopped at Dominick's stores throughout the Chicago region would need to find other places to buy groceries. In the meantime, Jana Partners scored millions in profits on its Safeway investment.
In response workers made an outrageously creative video thanking Safeway for their unbridled greed and disregard for Dominick's workers. The video creator was suspended from his job on the day he would be fired anyway. That is hilarious, yes, they disciplined the poor worker bee as Safeway was shuttering the store. The below must watch video is amazingly well done and just freakin' funny! Great job grocery bag boy no longer! What we also have here is yet another fine example of the underemployed in America.
It is just incredible Safeway would fire someone with that level of creativity and initiative. But that's corporate America for ya. Large corporations want drones, slave marchers and nary an original thought shall be issued. Exercising their individual freedom of expression shall be punished as one of the commandments of corporate policy. Of course some executive surely received a multimillion dollar bonus for requiring Safeway cashiers to read that customer's name off of their receipt in order to thank them by name at the check out. What fun predators, thieves and stalkers had with that one, a guaranteed way to identify their intended target by following them into the Safeway check out line. No matter how absurd, if an executive endorses something it will pay. If a lower employee comes up with something actually useful and creative, they will be punished.
Folks, let's all not shop at Safeway chains in response to this absurdity. Safeway chains are Vons, Tom Thumb, Pak'n Save, Pavilions, Randalls and Carrs-Safeway. The reality is Safeway ran Dominick's into the ground in the first place. They replaced the quality foods with their higher profit margin, lower quality ones and ruined the name.
The motif in the above video is most apropos. How many other workers have been fired for speaking out? The list is long and workers generally are at risk for almost anything deemed to be an offense. Hostess shuttered the plant to get rid of worker pensions and unions, only to have Hostess return with non-union, low paid workers. Domino's workers were fired for protesting low wages. An entire sandwich shop staff was fired for participating in wage protests. Walmart workers were fired last year for their low wage and working conditions Black Friday protest. In Texas, a study showed 21% of workers were fired after being injured on the job.
The attack on labor in this country is epidemic. The reason the Thanks Safeway video is so funny is the ring of truth. Corporations come in and fire people like the Star Wars evil empire death star ray and almost on a whim. Wall Street rewards these behemouths for such actions by raising their stock price. The only time wages are even mentioned on Wall Street is when consumer spending and retail sales do not give them the increases they are looking for. The consequences to real people and their economic well being isn't even a consideration anymore.
My friends were involved in the recent Kroger labor dispute. They had been working without a contract for a year. Then this fall there was a union dispute where the managements offer was a pie in the sky wish list for hedge fund managers. Limiting holiday pay and getting rid of paid sick leave, eliminating health benefits and so on. It turned out that Safeway was driving the lopsided offer and it went up to the day before the planned strike that they finally saw sense. So this comes as no surprise to me.
This is why we have to fight to keep our Unions strong in this country or we might as well just succumb to China and be communists
Correction and comment
Safeway did not close Dominick's shortly after purchase...they have owned the chain for several years.
However, Afta (and someone else) did get some nice profits.
Check the stock price. Afta bought in to Safeway from July to early September (per Chicago Tribune report). Then, in the 5 days prior to the announcment of that purchase, the price of Safeway stock jumped about 20%. By the time Safeway announced the closings, the stock had peaked at $34/share, Afta sold off about half of its stake for about 40% profit on that chunk of change. I am surprised that that little price jump hasn't been talked about more.
Thanks for correction
I'll update the article, but it was the buy in by the hedge funds I'm referring to, not the original acquisition.
Love how Wall Street rewards evil deeds. Every time. They should ban trades on a stock on layoff news or doing something to stop a guaranteed increase in the stock price the minute a company decides to screw over their employees.